Embattled German carmaker Volkswagen plans to freeze salaries for its staff worldwide at 2026 levels until 2030, the group's works council said Monday.
Volkswagen's executive board instructed human resources managers worldwide to suspend pay increases, according to the company's Global Works Council.
The council said it had received internal information about the executive board's plans. Volkswagen declined to comment on "speculation."
A spokesperson added that a new round of talks later this week would be the forum for any proposals on labor costs.
The directive has been in effect since early October, replacing a budgeting approach that allowed compensation for inflation and locally negotiated wage increases, the council said.
It called the management's approach "absurd" and said it expected strong resistance to what is described as the plan's "rather unrealistic" implementation.
"At Volkswagen, pay development is decided at the negotiating table, not by decree from the executive boardroom," a spokesperson for Germany's trade union IG Metall said
IG Metall is seeking a 5% wage increase over 12 months.
Volkswagen employs more than 660,000 people worldwide, including 275,000 in Germany.
Works Council President Daniela Cavallo asked management Sunday evening to explain the plan to employees.
Relations between Volkswagen and its labor representatives have deteriorated in recent months, as CEO Oliver Blume pushes ahead with the most radical restructuring in the German auto group's history.
The Sueddeutsche Zeitung reported the news earlier Monday, citing internal documents.
The absence of pay rises could mean a loss of income of around 10% for those affected, due to inflation, the paper said.
The report said the new global management guidelines, effective from the fourth quarter, also include cuts to variable pay, special payments, benefits and jobs.